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Lawmaker opposes calls for PSE to take over WESM operations

A member of the House energy committee rejected calls for the Philippine Stock Exchange to take over the operations of the Wholesale Electricity Spot Market, the country’s trading floor of electricity.

“PSE is a stock market. They have experience, and they have capability, but as a market of equities and not as electricity spot market,” Puwersa ng Bayang Atleta (Rep. Jericho Nograles said during the NANKA Media Forum on Friday.

Nograles, who serves as House energy committee vice chairman, said the PSE had no experience in running an electricity spot market, which is an important requirement under the implementing rules and regulations of the Electric Power Industry Reform Act of 2001.

Rep. Jericho Nograles
Nograles also said the decision to award the contract to operate the WESM to the current operator Independent Electricity Spot Market was legally flawed and as such, the former should be abolished.

The former WESM operator Philippine Electricity Market Corp. transferred to IEMOP through an operating agreement the operation of WESM on Sept. 26, 2018 as approved by the Energy Department. PEMC currently supervises WESM.

“The operating agreement between PEMC and IEMOP is void ab initio. What should be done by the secretary or IEMOP, for IEMOP to recognize its legal infirmities to avoid further prosecution, all they have to do is rescind and give up the market operation and give it back to PEMC which is back to status quo,” Nograles said.

The lawmaker said that if WESM’s operations are returned to PEMC, “we can move forward by creating the proper independent market operator as envisioned by the EPIRA law.

“Let’s just go back to PEMC. I don’t see it a problem if we go back to PEMC because it is not about who is running the market. It is the legality of the juridical entity that’s running the market,” Nograles said.

He said the House and Senate’s energy committees along with the Energy Department could then create a technical working group to revisit the IRR of the EPIRA law and “ clarify all the gray matters.”

Nograles also said that upon the course of the investigation of the committee, there were some relationships in IEMOP that were put into question that could be a ground for graft and corruption.

He said an official of the IEMOP is married to an assistant secretary of the Energy Department while another official is married to the president of National Transmission Corp.

“It’s possible the Ombudsman can investigate motu propio. It’s also possible that after the committee completes its investigation, we can forward it to the Ombudsman for appropriate action,” Nograles said.

Nograles also said the legal justifications for the creation of IEMOP resided on the EPIRA, a 2012 Justice Department opinion and a discussion of the Joint Committee on Energy and “not even a resolution of JCPC.”

“So because of this legal justifications or the lack thereof, they forgot the other laws that are related to it. For example the Governance Commission Act, the Philippine Competition Code or the Anti-Graft and Corrupt Practices Act or the Plunder Act or even the Procurement Act,” he said.

“It’s very clear in the Procurement Act that when a GOCC decides to privatize or decides to spin off, it’s covered by all of these laws that were not even considered by the technical working group that was formed by Secretary Cusi,” he said.

Nograles said that from the point of view of Congress, the transfer to IEMOP and the privatization of PEMC was “very problematic” because it did not receive an approval from the President of the Philippines.

He said IEMOP’s articles of incorporation were filed in May 2018 with the purpose of managing and operating the market for the wholesale purchase of electricity and ancillary services in the Philippines or WESM.

IEMOP’s operating contract for the WESM was signed in September 2018.

“So this alone can be construed, may be construed as prima facie evidence for graft. Why did they, upon inception, know that they will get the operation of the wholesale electricity spot market?” he said.

He said IEMOP also failed to secure an approval from the Energy Regulatory Commission to collect market transaction fees.  He said IEMOP also lacked the financial and technical capability to run the market given its P7,000 market capitalization.

Topics: Rep. Jericho Nograles , Philippine Stock Exchange , PSE , Wholesale Electricity Spot Market , WESM
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